The SDREC is considering whether to take action against broker Leo, whose license is currently on inactive status. Leo has been providing real estate advice and negotiating purchase agreements for friends 'as a favor' without compensation. Leo argues that because he receives no compensation and his license is inactive, the SDREC has no authority over his activities. Which of the following most accurately reflects South Dakota law on this issue?
Correct Answer
A) Leo is incorrect; performing acts that require a license — such as negotiating purchase agreements — without an active license constitutes unlicensed practice regardless of compensation, and the SDREC may take action
Under SDCL Chapter 36-21A, practicing real estate — which includes negotiating purchase agreements on behalf of others — requires an active license. An inactive license does not authorize a licensee to perform acts that require a license. Furthermore, the lack of compensation does not exempt the activity from licensing requirements; the statute defines regulated activity based on the nature of the act, not solely on whether compensation is received. The SDREC may take action against Leo for performing licensed activities without an active license.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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